This Morning: YHOO’s Alibaba Tally, No Samsung Veto, How Will HP Guide?

By Tiernan Ray

Here are some things going on this morning in your world of tech:

Shares of fiber optic networking component supplier Finisar (FNSR) are up $1.16, or 5%, at $24.70, after Jefferies & Co.’s James Kisner this morning raised his rating on the shares to Hold from Underperform, and raised his price target to $22.50 from $11.50, writing that “Our checks suggest 10G and 40G are likely to continue to grow quite robustly through 2014 as optical continues to take share from copper in data centers and enterprise LANs as speeds increase from 1G to 10G.” However, he warns there is still a threat that transceivers formed of plain old silicon will cannibalize the 10G and 40G transceiver market of exotic optical materials.

Yahoo! (YHOO) shares are down 30 cents, or 0.9%, at $33.84, despite a positive note from Stifel Nicolaus‘s Jordan Rohan, who reiterates a Buy rating, and raises his price target to $41 from $33. Rohan raised his valuation assumptions for the first two tranches of stock that Yahoo! may sell when it starts to unwind its investment in Alibaba Group Holding, the Chinese e-commerce giant that is expected to go public sometime this year or next. Writes Rohan, “The value of Alibaba may exceed our prior $90bn/$120bn EV estimate (pre-tax). We now believe $120bn/$150bn is more accurate.” He expects the customary update on Alibaba’s financial results when Yahoo! reports Q3 results next Tuesday, October 15th.

Following a flurry of positive views on Apple (AAPL) yesterday, the Street continues to ponder possible implications of what are expected to be robust sales of the iPhone 5S.

Wells Fargo’s Maynard Um, reiterating an Outperform rating, writing that Apple’s gross margin usually gets better with the “S” release of an iPhone model, and that could happen this time as well, writing “If our accounting reversal assumptions are correct and assuming 5s/c mix goes to two-thirds of iPhone volumes, we believe December corporate gross margins could be 39.6% (versus our 38.3% estimate)–or $0.56 in incremental EPS–without calculating any potential incremental benefits from deferred margin on component sale or warranty accruals.”

And speaking of Apple, Bloomberg TV reported a short while ago the White House has rejected a request from Samsung for a presidential veto of an import ban imposed on Samsung’s products in Samsung’s ongoing patent battle with Apple. Apple earlier this year won a presidential reprieve from a court-ordered ban on import of some iPhone and iPad models. U.S. trade rep Michael Froman was quoted as saying that he had carefully weighed policy considerations and the advice of various agencies and interested parties.

Cantor Fitzgerald‘s Brian White offers further reports from China as he makes his way through meetings with the supply chain. Writes White, “Our meeting with a leading telecom carrier highlighted continued, near-term momentum in the China smartphone market and a shift in focus in the country to ramping up a 4G network.” He also notes Samsung Electronics (005930KS) is the top smartphone vendor, according to carriers, and that there continues to be a preference among consumers for local Chinese smartphone brands, and that the lack of a 5-inch or greater screen size on an iPhone continues to hurt Apple, though there is plenty of interest in the 5S at the same time.

Shares of Equinix (EQIX) are down 45 cents, or 0.3%, at $165.25, after the company last night said it struck a deal with Microsoft (MSFT) for a “direct connect” between its hosting facilities and Microsoft’s “Azure” cloud computing facility.

Writes Gray Powell of Wells Fargo, the deal is “a modest positive for EQIX” and that ” this will help EQIX continue to differentiate from other data center peers which lack network density or diverse ecosystems.”

RBC Capital‘s Mark Mahaney today explores several aspects of the online travel industry, writing that his recent research reveals that “Expedia (EXPE) showed declines in US paid hotel results while US organic hotel results countered with improvement; Priceline (PCLN) remained largely stable, as usual, although priceline.com showed declines in US paid hotel while booking.com picked up in the same region; and Orbitz (OWW) showed improvement in organic hotel results, while paid hotel declined.

Hewlett-Packard (HPQ) will host its annual meeting with analysts on Wednesday, and the street is tuning up its estimates. Keith Bachman of BMO Capital Markets this morning reiterates a Market Perform rating on the shares, and cuts his price target to $24 from $27, writing that with HP’s fiscal year-end approaching — Q4 ends this month — “We think the primary question will be does HP guide earnings and/or FCF up, down or flat.”

“We think flat to down on a y/y basis.”

Shares of HP are down 21 cents, or 1%, at $20.72.

RBC‘s Amit Daryanani this morning reiterates a Sector Perform rating on shares of International Business Machines (IBM), and cuts his price target to $205 from $210, after “modestly” cutting estimates for this year “to reflect f/x headwinds coupled with tepid demand expectations.” He’s waiting to “gain clarity on future growth potential and IBM’s positioning in the growing and disruptive cloud markets.”

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.